As Ram described it, India is just entering Web version 1.0. This is characterised by similar concepts we saw in the late nineties in the US and Europe:

lots of start up and entrepreneurial activity;

focus on flights; and

commission driven business (rather than media or merchant model).

However, there are a couple of big differences in the Indian version of Web 1.0. A couple of highlights:

Air is not the only transport game: While flights are the high profile business to look at, there is enormous activity in ground transport – rail and road. RedBus claim 20% of the bus market is now booked online. Indian Railways in the largest online travel business in Asia (according to Ram) measured by transaction numbers. However in both cases the average booking value is very low – measured in the tens of cents;

The OTAs and LCCs play nice: Unlike the battles in Europe and the US between low cost carriers and the online travel agents, in India OTAs such as Makemytrip and Yatra are critical to the distribution of LCC inventory. According to Ram’s research, 10-15% of the low cost carrier volume in India is coming through OTAs.

Localised but English: When western companies expanded across Europe the key guideline was to localise as much as possible – language, look’n’feel and product. In the case of the Indian OTAs the best way to reach the target market of middle class Indians is to keep the product in English, not in one of the many local languages. This is not true for the lower booking value RedBus but very true for the full service providers; and

Hotels need dramatically more technology support: It took a long time and arguably the economic after effects of the 9/11 attacks for hoteliers in the US and Europe to be convinced of the need for online distribution. The barrier was to convince them to join the channel, the barrier was not technology. In the case of the Indian market technology is an issue. Indian hotels tend not to have the CRS, PMS and Internet connected architecture that you expect to see in a US/Euro hotel. Yatra are approaching this problem by building a property management software suite and giving it away to hotels. Naturally it comes with means to connect to Yatra but the suite also stands alone as a property management system (according to Yatra’s Shringi). Nice idea.

The local players are not alone in exploring Web 1.0 in India. I asked from the audience what impression Expedia and Travelocity where making in the market. Both recently launched in India with localised approaches (in English) that match the expansion approach each has adopted in Europe.

Yatra’s Shringi and Makemytrip’s Joshi were dismissive of these efforts by Expedia and Travelocity in India. They very confidently claimed victory for the big local players (I presume including Cleartrip and Travelguru) over the global giants. When I put this to Jens Uwe Parkitny of Expedia later in the day (new Managing Director-Distribution, Asia Pacific), his quick reply with a smile was “that is exactly what they [competitors] said when we entered Germany and France”.

What’s next? If the trends of Europe and America apply then we should see the large local Indian players move into hotels and cross sell, frenetic consolidation and investment activity, PPC cost inflation and the arrival of the of the media model. Fun times ahead.

But (and this is a comment I have made before), online in the China market does not have the same definition as we would use elsewhere. Online should mean "no touch". Where the transaction is completed without the interaction between the customer and the intermediary at a people level. In the case of ctrip - 80% of there transactions are conducted purely through the call centre. This is not even web referred (ie search online but complete by phone). This pure offline call centre stuff - where the consumer dials ctrip and completes the whole transaction via the phone. There is nothing wrong with this, ctrip is a highly profitable and growing company. It is just important to know what it means to be online in China.

Next to ctrip's Chang was Fritz Demopoulos of Qunar. They are Chinese largest travel meta-search and content company- claiming more than 20 million montly users. The qustion I posed and we dont have a clear answer for is "if Qunar is 100% online and ctrip is only 20% online, then doesn't that make Qunar the largest online travel player in China?". We don't have an answer because clearly ctrip is a bigger company and Qunar is in the less mature business of online media. But it again highlights the interesting nature of the online/offline travel market in China. The bigger website (Qunar) is the smaller business.

Wednesday, October 22, 2008

I did a post yesterday at WebInTravel on my belief that online travel companies end up designing their products around search result and that this is not necessary compatible with designing the produce with the consumer in mind. Claire Hatton - Google's Head of Travel in the Asia Region posted a response. Thank you Claire for joining in the conversation. Here is her comment in full

Hi Tim,

I usually don't comment on posts but I feel the need to give you the Google perspective on this one. Of course there are technical requirements such as clear structures and hierarchies that websites should include, so that any search engine can find and index your content.

To rank well in Google, site owners and businesses need to make their pages for users. We use hundreds of different signals to rank webpages. The reference to links and structures really just scratches the surface. Google has changed a lot and improved its ranking tools since PageRank was invented in the 1990s. Focusing only on links and other traditional SEO techniques is not the way to improve your site's rankings - in fact, building pages for search engines and not users is, in my experience, a surefire way to deliver a website that consumers don't like and that will not rank well.

What will drive good search rankings - and I have seen this from my experience working with travel companies - is making pages that consumers come back to, talk about, link to or reference, send to friends and generally enjoy using. In this sense the comment about url's is important - a consumer needs to be sure they are going to a relevant, trustworthy site.

We make all of this clear in our Webmaster Guidelines within Google Webmaster Tools, which are valuable resources for people building websites. Anyone who is interested can find them here: www.google.com/webmasters/tools/

Tuesday, October 21, 2008

Today at WebInTravel Phillip Wolf and Ram Badrinathan of PhoCusWright had a round table discussion on a number of industry issues.

The first statement Phillip posed to us was

“What is best for a consumer in a website’s design and functionality is not the same as what is best for generating the best search engine results”

My answer is that this is true. When a product/marketing team for an online travel company sit a room talking about future plans (as a purist) you would want the number one thought to be “what will be best for our customer”. Unfortunately the pressure of search drives us instead to ask “what does Google need for the best organic results".

A consumer focused proposition is around choice, service, trust, price, interaction and answers. A search based proposition is around links, content , indexing, technical format and my favourite word “uniqueness”. These are no in absolute conflict but there are not the same and require a different mindset. I worry that the second mindset (search focus) is overwhelming the first (consumer focus). This pushes us to grey and (near) black hat activities harming and distracting us from the consumer experience.

I am being naïve to think that marketing and product teams will read this post and refocus away from search to the consumer. Search is just too important for that to happen. Throughout time companies have had to adjust their products away from consumer need to the marketing and distribution environment. Witness continued DVD distribution of movies over fears of download encryption and piracy. Going further back look to the victory of VHS over Beta-max despite the acknowledged technical superiority of Beta-max. It is only natural therefore that search would dominate our thinking. But it worries me. I am a consumer purist and am concerned about the unstoppable trend to design products around search compliance and maximisation rather than consumer maximisation.

What do you think? Are targeting for search and targeting for consumers incompatible?

I am glad that BA are listening and am thrilled to receive the response from Reactive. But I still worry that the approach is that community, sharing and booking are "new features" to be added later rather than the core of the strategy. The difference in thinking is whether or not the strategy is to

"use content to drive traffic, generate revenue and then build features on top"

vs

"use content to build community, build brand and link all elements to the customer experience"

In the first you measure success through the eyeballs generated and revenue gained through ad sales. In the second you measure success through the engagement of customers, time spent on site and the ultimate bookings revenue. I get the strong sense that BA in the Highlife online project is falling for the allure of the first rather than the long term customer ownership benefit of the second.

Don't get me wrong there is a lot of (good) money to be made off eyeballs. Media companies have been making billionaires off eyeballs for decades. In Travel there are also fortunes to be made from eyeballs as I have talked about here and here. But if you are chasing eyeballs then you are a no ifs, no buts, media business. Travel suppliers and (to a lesser extent) travel intermediaries need to think very carefully about turning to the media business as a business plan. Sure there is money in eyeballs and ad sales but the main aim of a travel company is to sell travel. The best way to use content to sell travel to punters is to draw the consumer in and keep them in. Don't send them to someone else, don't let them search for some other way to book or purchase, don't let them think about an alternative. Instead the travel retailer needs to live and breath drawing the consumer into the brand, the idea and the desire to search, to engage with you and to give you (the travel seller) their money.

BA should be thinking about BAhighlife.com not as a content/media business that needs community features but as a customer engagement tools that will lead with engagement and a drive for planning and booking (with some ad revenue on the side).

What do you think? Should travel retail companies and suppliers be creating media only business with their content or using their content to drive brand and bookings?

Friday, October 10, 2008

Read in newmediaage that British Airways has launched a dedicated content website - BAhighlife.com - based on the years and years (35) of content from their inflight magazine highlife. This is a great move by BA. Other than the website architecture and support this is a very low cost means for BA to generate organic traffic from travel searches. Assuming they have indexed the content properly (and from my initial glances it looks like they have) they will also be able to generate traffic outside of pure traveller review searches (ie in sport, entertainment etc). Good move by BA.

But the launch here is still a dramatic under-utlisation of a enourmous amount of good quality editorial content. Once a consumer lands on a article/page at BAhighlife.com this is what they can do with it:

read it;

email it; or

bookmark it.

That is it. If BA wants to make the most out of this then the customer should be able to:

Share: share with social networking site (digg, facebook, reddit);

Comment: make comments, join in a conversation about the article;

Find more: find other related content selected by consumers, from the same author, about the same destination;

Save: save favourite stories on a profile page or trip plan page;

Use: use all information gather to build up a trip plan; and

Book: have contextual links to relevant trip itineraries.

In other words build an interaction and community service that drives brand and bookings rather than a news service that adds a little bit of traffic and ad sales rev.

Also expecting a representative from Expedia to be confirmed very soon.

Do you have any questions you would like to ask this great collection of industry insiders. Feel free to put your questions in the comment section of this post. I will take the best of the best with me to the conference. Include your name/company and I will mention you (if)when I read out the qustion.

Steve Sherlock of Oodles sent me me a email pointing out a very interesting quirk that can give OTAs a functionality advantage over meta-search. Typically I would have thought that top notch meta-search are going to be better at delivering customers to the top fare combinations versus OTAs. The OTAs would have the advantage in packaging, customer rewards, content and community and other retail elements but that meta-search would have the lead in the search and user friendliness.

But in the Australian domestic market the airlines have structured their fares in such a way that they are very user unfriendly for meta-search. The results list is full of all the fares you would want to see on a typical Australian domestic city pair (say Sydney/Melbourne) but you have to book the outbound and return separately. There are two click offs prompted by the metasearch. Here is a shot from Wego to show you what I mean

Clearly this is something on the airline side, not within Wego. Meta-search results are dependent on their source material. Since the vast majority of domestic in AU is sold as one way segments then a meta company needs two searches and two separate results to produce a fare. The bulk of long haul is still defaulted to return so they have different value. I suspect this may even be a deliberate limitation that the airlines are using to drive customers back to the direct sites of Qantas, Virgin-Blue, Jetstar and Rex.

Webjet are the largest Australian OTA (by gross bookings). They have found away around this problem through the design of their underlying technology (called the TSA or Travel Services Aggregator). They are able to capture all of the segments from multiple carriers. The customer's card is collected once and then sent to all of the points of charge. For a multi-carrier fare this may mean that the card is charged three times (once by the first carrier, once by the second and a third time by Webjet for the fees) but the consumer has only had to enter the details once. In the battle between Online Agents and Meta-search, when it comes to domestic Australian flights it seems to be advantage OTAs.

Anyone out their from Wego or Webjet care to comment - would love to do a follow up post with your views? Anyone else know of similar consequences in other domestic markets?

I have just spent the loveliest of weekends away at the Observatory Hotel in Sydney. Located in Sydney's "historic" Rocks area, this Orient-Express hotel is one of Sydney's finest. [side bar - You have to put the word historic in quotes when describing the Rocks as it is embarrassing to say that for white Australia all you need is a 150 year old building and suddenly it is historic. The current Rocks is little more than a tourist trap shopping area, albeit with fantastic water views.] It is not often that I do reviews on the blog but when I am very impressed with a property I am drawn to write about this (happened earlier this year after I visited Luton Hoo). The Observatory is at the top end of luxury in Sydney without the "international" reputations of say the Harbour Shangri-la, Westin, Sheraton on the Park or Park Hyatt.

First to the decor and feel of the hotel. At the Observatory they have managed to deliver in the fit out and staff an unlikely balance between modern, relaxed and what I can best describe as traditional old Europe. The staff are attentive but not stuffy, the fit out is floral and "country club" in nature yet very modern in facilities and function. Rooms are of a fantastic size and very quiet despite the noisy city and harbour bridge being only metres away.

I liked little touches like a complementary car ride into the city (if needed), that they recorded the reason for my stay (10th anniversary) and congratulated me and the wife on arrival and the supplying hot chocolate and herbal tea options with the turn down service.

Two small areas of criticism. The Pool is a great size and the health club facilities impressive but the area is busy, full of people, noisy and peak times and therefore only relaxing out of hours. The Globe bar area is charming and relaxing, with very attentive staff. However breakfast service was a little tardy. I think more staff are required to make sure customers are not left waiting longer than is reasonable at $40 for the continental breakfast. But these small quibbles are only worthy of publication because of the lengths I had to go to find them. A great stay and now on my list of recommendations for high end leisure and business travel to Sydney.

Disclosure - my stay at the Observatory was on my own dime but I was granted an industry rate and upgrade.

At times like these, when the news is all bad on the financial front, there are the pessimists who see doom and gloom and there are the optimists who see silver linings behind every dark cloud.

You could probably put Timothy Hughes, who will be speaking at WIT this month, more towards the optimistic camp, albeit he is a pragmatist as well.

Asked what he thought the financial meltdown in the US would mean for travel and tourism, the vice president-commercial, Hotelclub,com and the blogger behind BOOT - The Business Of Online Travel, said, “The news will be bad. Money will dry up for investment in start-ups and people in affected industries will think twice (three times and more) before pulling out he credit card.”

But, being the optimist, he added, “We (the industry) have survived worse and the consumers have rebounded from worse and continued to travel. I blogged about this just recently pointing out that the US travel market bounced back from 9/11 within a quarter. Same for Hong Kong and Macau post SARs. Humans love to travel and will come back with a vengeance. However the industry can’t just wait for them (the consumers), we need to keep re-inventing.”

RedHerring is the tech boom magazine who's death keeps being reported and yet somehow managed to survive. Every now and then I check in on the online version to see what is happening. In keeping this week's (accidental) start-up theme at the BOOT, I came across the list of the Red Herring North America 100 from back in May 2008. This is their list of the top 100 start-ups in North America. Lots of good pedigree here as past winners include Google, Yahoo!, Skype and YouTube (with a little glitch around Netscape).

Much like TechCrunch50 I could only find one travel company on the list - tripJane. tripJane was also a finalist in the TechCrunch50 - being part of what they called the demo pit (ie not on the main stage but out in the foyer on a card table).

No details on the tripJane website on what they do. Something about social networking, purchasing and planning - which we have heard before. Here is the Crunchbase profile for a little more.

At lot of time has passed since the May RedHerring awards. Anyone out there from tripJane want to share with us what you do.

Promise next week to leave start-up land the get back to the more regular feature of this blog - whining about Qantas covering general industry trends.

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